The Cabinet Committee on Economic Affairs (CCEA) has approved continuation of Credit Guarantee Fund for Education Loans Scheme. It also approved continuation and modification of Central Sector Interest Subsidy Scheme for period from 2017 to 20. This will provide education loans to 10 lakh students during this period. The restructuring of scheme is in accordance with policy of Government to make good quality education affordable to all.
Ceiling on loan amount has been refixed at Rs. 7.5 lakhs, considering the average loan size only of Rs. 4 lakhs in order to allow more students to access the benefit. The moratorium period will be course period + 1 year.
The scheme will now cover loans for pursuing professional and technical courses from NAAC and NBA accredited Institutions and programmes or Institutions of National Importance or Central Funded Technical Institutions (CFTIs) to promote quality education. But this condition will be applicable with prospective effect, and will not apply to current loans. Dashboard will be put in place for better monitoring of the scheme.
Under the revised scheme, the numbers of loans per year are expected to be at least 3.3 lakhs i.e. 20% increase over previous scheme. The scheme which ran since 2009, average educational loans per year were only 2.78 lakhs.
Central Sector Interest Subsidy (CSIS) Scheme
CSIS Scheme was launched in April, 2009. Under it, full interest subsidy is provided for education loan taken from Scheduled Banks under Model Education Loan Scheme of Indian Banks’ Association. It is covering a period of course duration + 1 year.
The educational loan under CSIS is made available for all professional and technical courses in India and students with annual gross parental income up to Rs. 4.5 lakhs. The loans are disbursed without any collateral security and third-party guarantee.
Credit Guarantee Fund for Education Loans (CGFEL) Scheme
CGFEL Scheme provides guarantee for education loan under Model Education Loan Scheme of Indian Banks’ Association. It is disbursed by banks without seeking any collateral security and third-party guarantee for maximum loan amount of Rs.7.5 Lakhs.